Developments of Islamic Banking in Bangladesh...3 Developments of Islamic Banking Industry in...
Transcript of Developments of Islamic Banking in Bangladesh...3 Developments of Islamic Banking Industry in...
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Developments of Islamic Banking in Bangladesh1
January-March, 2018
Islamic Banking Cell
Research Department
Bangladesh Bank
1Prepared by Islamic Banking Cell, Research Department, Bangladesh Bank (Central Bank of Bangladesh). Feedbacks are welcome. Feedbacks may be sent to Nazmun Nahar Mily, Deputy General Manager, Research Department, Bangladesh Bank. (E-mail: [email protected]) and Subarna Ershad, Assistant Director, Research Department, Bangladesh Bank. (E-mail: [email protected]).
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Quarterly Report Preparation Committee
Chairman Dr. Md. Akhtaruzzaman
Economic Adviser
Coordinator Md. Abdul Awwal Sarker
General Manager
Team Member Nazmun Nahar Mily Deputy General Manager
Subarna Ershad Assistant Director
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Developments of Islamic Banking Industry in Bangladesh during January-March 2018
Islamic banking has expanded three times of its size from 2007, with Compound Annual Growth Rate (CAGR)
of 11.6% and takaful sector has grown 5 times with a CAGR of 19.34% during this period. Islamic banking
sector has already become systemically important in over 12 countries with more than 15% market share
globally.2 The total assets of the Islamic banking industry of IFSB member countries grew from USD 1,391
billion in 2016Q1 to USD 1,480 billion in 2017Q1 (calculated from country-wise aggregated data converted
into USD terms using end-period exchange rates). Total funding/liabilities increased from USD 1,283 billion in
2016Q1 to USD 1,362 billion in 2017Q1. Gross nonperforming financing ratio (gross nonperforming financing
to total financing) showed an improvement with a decrease from 5.9% in 2016Q1 to 5.2% in 2017Q1. On the
liquidity indicators, the liquid assets ratio (liquid assets to total assets) decreased over the period from 35.7% in
2016Q1 to 34.5% in 2017Q1, while liquid assets to short-term liabilities ratio increased from 13.9% in 2016Q1
to 14.6% in 2017Q1.3
Islamic Banking has remarkably captured the interest of both Islamic and contemporary economists. Parker
(1993), observes that the introduction of Islamic banking principles by various western bankers have shown a
positive results which indicates that Islamic banking systems can work effectively in both developed as well as
developing nations regardless of religious boundary. The introduction of interest-free and equity-based Islamic
banking system, proved its significance in the country's banking sector which continued to show strong growth
since its inception in 1983 in tandem with the growth in the economy, as reflected by the increased market share
as well as in mobilizing deposits and financing key sectors of the economy in Bangladesh. This report gives an
overview of the Islamic Banking Industry regarding the developments taking place during the January-March
2018 quarter. As at the end of March 2018, 8 full-
fledged Islamic banks are operating with 1137 branches
out of total 9973 branches of the banking industry; in
addition, 19 Islamic banking branches of 9 conventional
commercial banks and 25 Islamic banking windows of 8
conventional commercial banks are also providing
Islamic financial services in Bangladesh. At the end of
the January-March 2018 quarter, deposits and
investments, of Islamic banking industry grew by
0.61%, 4.00% respectively and remittance lowered by
18.34 % while surplus liquidity declined by 41.77%
compared to the previous quarter. Islamic Banking
Industry accounted for more than one-fifth share of the
entire banking industry in terms of deposits and
investments at the end of the quarter under review.
2 23 October 2017, Press Release, IFSB, Speech by the Acting Secretary General of the IFSB at the IFSB Summit, 2017 3 The IFSB Bulletin Volume 5 Issue 2 | Dec 2017, page-4.
Though surplus liquidity declined compared to
previous quarter as well as corresponding quarter
of the previous year, actually Islamic banks in
Bangladesh have been facing excess liquidity
problem since long as they cannot invest in
Government Treasury Bills and Bonds because of
the very interest bearing nature of those
monetary instruments. During this quarter,
remittances decreased significantly through
Islamic banks of Bangladesh.
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Highlights on Islamic Banking Sector in Bangladesh, January-March 2018
Total
Deposits
Total Deposits in Islamic banking industry reached at Tk. 215557.93 crores at the end of
January-March 2018 quarter, which increased by Tk. 1298.51 crores or by 0.61%
compared to previous quarter and by Tk. 25300.23 crores or by 13.30% compared to
corresponding quarter of the last year.
Total
Investments
Total Investments (Loans in conventional sense) in Islamic banking sector stood at Tk.
209147.92 crores at the end of January-March 2018 quarter, which went up by Tk.
8045.92 crores or by 4.00% and by Tk. 32054.25 crores or by 18.10% compared to
previous quarter and same quarter of the preceding year respectively.
Investment-
Deposit
Ratio
Investment-Deposit Ratio (Credit-Deposit Ratio in conventional sense) reached at 0.97
in January-March 2018 quarter which was 0.94 at the previous quarter of this year and
0.93 at the end of March 2017.
Surplus
Liquidity
Surplus Liquidity of Islamic banking industry stood at Tk. 5077.98 crores at the end of
January-March 2018 quarter, which was decreased by Tk. 3641.93 crores (41.77%) and
lowered by Tk. 2953.64 crores (36.78%) compared to the previous quarter and
corresponding quarter of the preceding year respectively.
Total
Remittances
Total Remittances mobilized by the Islamic banking sector stood at Tk. 9039.97 crores
at the end of January-March 2018 quarter, which was lower by Tk. 2030.89 crores or by
18.34% compared to the previous quarter and higher by Tk. 2379.80 crores or by
35.73% compared to the same quarter of the preceding year.
Branches
The Number of Branches of Islamic banking sector including Islamic branches/windows
of conventional commercial banks stood at 1181 at the end of the quarter under review
which was 1168 during the previous quarter and 1052 during the same quarter of the last
year.
Manpower Total Manpower in Islamic banking sector was 32309 in number at the end of the
quarter under review which was greater by 1318 persons than that of the last quarter
and by 2262 persons compared to the same quarter of the last year.
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Table 1: Islamic Banking Activities compared with all banks in Bangladesh
Items
January-March 2018@ October-December
2017@
All Banks Islamic
Banks
Share of Islamic
Banks Among
All Banks
Share of Islamic
Banks Among All
Banks
1 2 3=(2/1*100) 4
Total Deposits (In Crore Taka) 925279.7 215557.93 23.30 23.13
Total Credit (In Crore Taka) 869562.30 209147.92 24.05 23.81
Remittances (In Crore Taka) 31743.47 9039.97 28.48 38.30
Total Excess Liquidity (In Crore Taka) 76888.16 5077.98 6.60 8.98
Total Number of Bank Branches 9973 1139 11.42 11.73
Total Agricultural Credit (In Crore Taka) 40420.62 948.39 2.35 8.26
Source: Statistics Department, DOS & BRPD, Bangladesh Bank.
@ Provisional
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Table 2: Islamic Banking Activities in Bangladesh, January-March 2018
March-
18#
December
-17#
March-
17# Changes % Changes
Quarter Quarter Quarter Quarterly Annual Quarterly Annual
Total Deposits* ( Taka in Crore) 215557.93 214259.42 190257.70 1298.51 25300.23 0.61 13.30
a) Full-fledged Islamic Banks 204526.34 203698.12 181207.99 828.22 23318.35 0.41 12.87
b) Conventional banks having Islamic banking
branches
6116.58 5866.19 5289.28 250.39 827.30 4.27 15.64
c) Islamic banking windows 4915.01 4695.11 3760.42 219.90 1154.58 4.68 30.70
Total Investments* (Taka in Crore) 209147.92 201101.99 177093.67 8045.92 32054.25 4.00 18.10
a) Full-fledged Islamic Banks 199047.29 191279.35 169071.21 7767.94 29976.07 4.06 17.73
b) Conventional banks having Islamic banking
branches
5670.12 5583.04 4805.41 87.08 864.71 1.56 17.995
c) Islamic banking windows 4430.51 4237.20 3217.05 193.30 1213.46 4.56 37.72
Investment/Deposit Ratio 0.97 0.94 0.93 0.03 0.04 3.37 4.24
a) Full-fledged Islamic Banks 0.97 0.94 0.93 0.03 0.04 3.64 4.31
b) Conventional banks having Islamic banking
branches
0.93 0.95 0.91 -0.02 0.02 -2.60 2.04
c) Islamic banking windows 0.90 0.90 0.86 0.00 0.05 -0.12 5.37
Liquidity Surplus(+)/Deficit(-) (Taka in
Crore)
5077.98 8719.91 8031.62 -3641.93 -2953.64 -41.77 -36.78
a) Full-fledged Islamic Banks 4187.96 7791.84 6662.74 -3603.88 -2474.78 -46.25 -37.14
b) Conventional banks having Islamic banking
branches
431 190.12 855.98 240.87 -424.98 126.69 -49.65
c) Islamic banking windows 459.02 737.95 512.89 -278.93 -53.87 -37.80 -10.50
Total Remittances (Taka in Crore) 9039.97 11070.85 6660.16 -2030.89 2379.80 -18.34 35.73
a) Full-fledged Islamic Banks 8986.51 10980.14 6609.92 -1993.63 2376.59 -18.16 35.95
b) Conventional banks having Islamic banking
branches
44.15 57.45 43.81 -13.31 0.33 -23.16 0.75
c) Islamic banking windows 9.31 33.26 6.43 -23.95 2.88 -72.01 44.82
Total Branches 1181 1168 1052 -29 87 -2.48 8.27
a) Full-fledged Islamic Banks 1137 1124 1008 -29 87 -2.58 8.63
b) Conventional banks having Islamic banking
branches
19 19 19 0 0 0.00 0.00
c) Islamic banking windows 25 25 25 0 0 0.00 0.00
Total Manpower 32309 30991 30047 1318 2262 4.25 7.53
a) Full-fledged Islamic Banks 31728 30408 29478 1320 2250 4.34 7.63
b) Conventional banks having Islamic banking
branches
400 405 393 -5 7 -1.23 1.78
c) Islamic banking windows 181 178 176 3 5 1.69 2.84
* = Excluding Inter-Bank Items
#Provisional
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Mobilization of Deposits
Total Deposits in Islamic banking industry reached at Tk. 215557.93 crores at the end of January-March 2018
quarter, which increased by Tk. 1298.51 crores or by 0.61% compared to previous quarter and by Tk. 25300.23
crores or by 13.30% compared to corresponding quarter of the last year. Among total deposits, demand deposit
was Tk. 24189.44 crores and time deposit was Tk. 191368.49 crores. The share of total deposits of Islami banks
accounted for 23.30% among all banks during the period under review.
Total deposits of the eight full-fledged
Islamic banks accounted for 94.88% of
deposits of the Islamic banking industry.
Deposits of 8 full-fledged Islamic banks
stood at Tk. 204526.34 crores as on end
March 2018.
Among Islamic banks, Islami Bank
Bangladesh Limited accounted for the
biggest share of deposits (35.48%) [chart-
1], followed by First Security Islami Bank
Ltd.( 13.78%), Al-Arafah Islami Bank Ltd.
(12.14%), Exim Bank Ltd. (11.68%),
Social Islami Bank Ltd. (9.01%), Shahjalal
Islami Bank Ltd. (7.15%), Union Bank Limited (5.13%), Islami banking branches (2.84%), Islami banking
windows (2.28%) and ICB Islamic Bank Limited (0.52%).
Types of Deposits
Among different types of deposits of the
Islamic Banking industry, Mudaraba
Term Deposits secured the highest
position (49.39%) [chart-2] followed by
Mudaraba Savings Deposits (MSD)
(18.36%), Other deposits (15.43%),
Mudaraba Special Savings pension/profit)
Deposits (8.62%), Al-Wadeeah Current
Account Deposits (3.99%), Mudaraba
Special Notice Deposits (3.25%),
Mudaraba Savings Bond (0.75%) and
Mudaraba Hajj Deposits (0.21%) etc.
IBBL35.48%
ICB0.52%
SIBL9.01%AL-Arafah
12.14%EXIM
11.68%
SJIBL7.15%
FSIBL13.78%
Union5.13%
Islami Banking
Branches2.84%
Islami Banking
Windows2.28%
Chart 1: Share of Deposits of all Islamic Banks (January-March 2018)
Mudaraba
Savings
Deposits
18.36%
Mudaraba
Special Notice
Deposits
3.25%
Mudaraba Term
Deposits
49.39%
Mudaraba Hajj
Deposits
0.21%
Mudaraba
Special Savings
(Pension/Profit
Deposits)
8.62%
Mudaraba
Savings Bond
0.75%
Al-Wadeea
current Account
Deposits
3.99%
Other Deposits
15.43%
Chart 2: Types of Deposits held by Islamic Banks
(January-March 2018)
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Investments
Total amount of investments in Islamic Banking industry reached at Tk. 209147.92 crores at the end of the
quarter January-March 2018. During the quarter under review, investments increased by 4.00 % and 18.10%
respectively as compared to the previous quarter and the corresponding quarter of the preceding year. The share
of total Investment of Islamic banks accounted for 24.05% among all banks.
Among total investments of Islami banks,
95.17% were made by 8 full-fledged Islamic
banks, 2.71% by the scheduled banks’
Islamic banking branches and the rest 2.12%
by the scheduled banks’ Islamic banking
windows. As in the case of investments,
Islami Bank Bangladesh Ltd. attained the
highest share in investments which was
35.29% at the end of the quarter January-
March 2018, (chart-3). The share of
investments made by other Islamic banks
included First Security Islami Bank Ltd
(13.23%), EXIM Bank Ltd. (11.90%), Al
Arafah Islami Bank Ltd. (11.57%), Social Islami Bank Ltd (9.84%), Shahjalal Islami Bank (8.05%), Union
Bank (4.88%), Islami banking branches (2.71%), Islami banking windows (2.12%) and ICB Islami Bank Ltd
(0.42%).
Sector-wise Investments
After analyzing the sector-wise
investment, it can be observed that
investment in the Trade & Business
sector (29.56%) sector was the highest
among all sectors (chart-4) at the end of
the quarter January-March 2018. The next
position was occupied by MSME
(Micro, Small and Medium Enterprises)
which stood at 28.27% followed by
Industrial sector (25.41%), Others
(6.69%), Real Estate (6.17%),
Agriculture (1.64%), Transportation
(1.41%), Electricity, Gas and Water
supply (0.77%) and Poverty Alleviation
(0.09%).
IBBL
35.29%
ICB
0.42%
SIBL
9.84%
AL-Arafah
11.57%EXIM
11.90%
SJIBL
8.05%
FSIBL
13.23%
Union
4.88%
Islami Banking
Branches
2.71%
Islami Banking
Windows
2.12%
Chart 3: Share of Investments made by Islamic
Banks (Januray-March 2018)
Agriculture
1.64%Industry
25.41%
MSME
28.27%
Transportation
1.41%
Real Estate
6.17%
Trade & Business
29.56%
Electricity, Gas
and Water Supply
0.77%
Poverty
Alleviation
0.09%
Others
6.69%
Chart 4: Sector-wise Investment made by Islamic Banks
(January-March 2018 )
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Mode-wise Investments
The analysis of mode-wise
investment revealed that the
highest investments was
made through Bai-Murabaha
mode (44.42%) at the end of
the quarter January-March
2018, [chart-5] followed by
Bai-Muajjal (24.88%),
HPSM (16.39%), Ijara &
Ijara-bil-Bai (7.21%), others
(3.00%), Musharaka
(1.53%), Quard with
Security (1.14%), Bai-Salam
(0.96%), Mudaraba (0.24%)
and Bai-Istisna (0.23%).
Investment situation in the Agricultural sector
Islamic Banking Industry has made tangible contributions in sectors and sub-sectors of agricultural and rural
investment programs. During January-March 2018 quarter, investments in agricultural sector made by Islamic
banking Industry reached at Tk. 948.39 crores which is higher by Tk. 185 crores and lower by Tk. 9.77 crores
than the previous quarter and the same quarter of the preceding year respectively. The share of total agricultural
investment of Islamic banks accounted for 2.35% among all banks during the quarter under review. Summary of
Investments in Agricultural Sector under the Islamic banking framework is provided in table-3:
Table-3: Summary of Investments in Agricultural Sector
Details Total Investment Agricultural Sector (Tk. In crore)
Target Actual
Investment
Investment
Target
Actual
Investment/
Disbursement
Target
Achieved
Recovery Investment/
Outstanding
Overdue
Investment
Classified
Investment
1 2 3 4 5 6 7 8 9 10
March-18# 33441.64 55498.29 648.06 948.39 146.34 954.94 3953.93 494.43 1203.58
December-
17#
31190.69 58478.39 606.27 763.39 125.92 949.84 3317.05 647.02 1047.21
March-17# 28125.18 50666.87 516.34 958.16 185.57 699.72 3039.16 291.87 1052.96
Quarterly
Changes
2250.95 -2980.10 41.80 185.00 829.02 3004.09 -2822.62 556.56 156.37
Annual
Changes
5316.46 4831.43 131.72 -9.77 769.37 3254.21 -2544.74 911.71 150.62
# Provisional
Bai-Salam
0.96%Mudaraba
0.24%
Musharaka
1.53%
Bai-Murabaha
44.42%
Bai-Muajjal
24.88%
Bai-Istisnaa
0.23%
HPSM
16.39%
Ijara & Ijara-bil-Bai
7.21%
Quard with Security
1.14%
Others
3.00%
Chart 5: Mode-wise Investment of Islamic Banks
(January-March 2018 )
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Liquidity Situation
At the end of the quarter January-
March 2018, surplus liquidity in
the Islamic banking sector stood at
Tk. 5077.98 crores which was
decreased by Tk. 3641.93 crores or
by 41.77% and lowered by Tk.
2953.64 crores or by 36.78% than
the last quarter and the same
quarter of the previous year
respectively. The surplus liquidity
of 8 Islamic banks, Islamic
banking branches of conventional
banks and Islamic windows of
conventional banks stood at Tk.
4187.96 crores, Tk. 431 crores, and
Tk. 459.02 crores respectively. It is observed that at the end of the quarter January-March 2018, surplus
liquidity declined significantly compared to previous quarter as well as corresponding quarter of the previous
year. The share of total excess liquidity of Islamic banks accounted for 6.6% among all banks during the period
under review. Summary of liquidity situation in the Islamic Banking sector is shown in chart 6.
Remittances Mobilized by the Islamic Banking Sector
Islamic Banking Industry of the country is
playing a vital role in collecting foreign
remittances and disbursing the same
transferring among beneficiaries across the
country. During January-March 2018, amount
of remittances reached at Tk. 9039.97 crores
which was lower by Tk. 2030.89 crores or by
18.34% and higher by Tk. 2379.80 crores or
by 35.73% than the previous quarter and the
corresponding quarter of the last year
respectively. Among the Islamic banks,
Islami Bank Bangladesh Ltd. occupied the
top position (79%) in respect of remittance
collection at the end of January-March 2018.
The shares of remittance of other Islamic
banks included Al Arafah Islami Bank Ltd. (9.28%), Social Islami Bank Ltd (4.70%), First Security Islami
Bank Ltd (3.57%), EXIM Bank Ltd. (1.27%), Shahjalal Islami Bank (1.26%), Union Bank Ltd (0.31%), Islamic
banking branches (0.49%), and Islamic banking windows (0.10%).
0
500
1000
1500
2000
2500
3000
648.0
0
1.2
3
715.6
8 1374.0
6
689.0
1
507.0
4
105.4
3
147.5
1
434.3
1
459.0
2
2692.1
7
4.8
9
659.8
1329.2
2
1667.3
5
424.0
6
498.0
3
516.3
2
190.1
2 737.9
5
Ta
ka
in
cro
re
Chart 6:Surplus liquidity of Islamic Banks over two
periods
March-18# December-17#
IBBL79.00%
ICB0.03%
SIBL4.70%
AL-Arafah9.28%
EXIM 1.27%
SJIBL1.26%
FSIBL3.57%
Union0.31%
Islami Banking Branches
0.49%Islami Banking
Windows0.10%
Chart 8: Share of Remittances made by Islami Banks (January-March 2018)
11
The Islamic Banking Industry accounted
for 28.48% share of remittances
collected by the entire banking industry
at the end of the quarter under review.
Remittance collections of all scheduled
banks, all Islamic banks, and Islamic
banking branches/windows of
conventional banks are provided in
chart-9.
Corporate Social Responsibility
Islamic banks undertake and implement various types of social programs under Corporate Social Responsibility
(CSR) activities. Sources of funds of Islamic banks available for CSR activities include Zakat, compensation
charges (penal charges from defaulting investment clients), and Sharia'h-permitted other sources of earnings.
These funds are spent among different types of education, training, health, and charity-based organizations in
Bangladesh. Islamic banks serve the deprived and disadvantaged segments of people, who, because of extreme
poverty, remain outside the purview of the conventional banking system; the banks make financial transactions
based on human necessities and embark upon productivity-oriented projects or activities to reduce the incidence
of poverty. Expenditure on CSR activities decreased by 7.39 % in this quarter compared to the previous quarter.
At the end of January-March 2018 quarter, total expenditure on CSR activities of Islamic Banking Industry
stood at Tk.122.73 crores which was Tk. 132.53 crores and Tk. 24.42 crores during the previous quarter and
preceding quarter of March 2017 respectively.
Expansion of Branches
The number of Islamic Banking branches (including Islamic branches of conventional banks and windows)
stood at 1181 at the end of the quarter under review which was 1168 at the end of the previous quarter and was
1052 at the end of the preceding quarter of March 2017. At the end of January-March 2018 quarter, among the
Islamic Banking Industry, 8 full-fledged Islamic banks had 1137 branches, 9 conventional commercial banks
had 19 and 7 conventional banks had 25 windows. The share of total bank branches of Islami banks among all
scheduled banks accounted for 11.42% at the end of the quarter under review. Information on branches of
Islamic banks is shown in Table-4.
All other Bank's 71.52%
Islami Bank's 28.48%
Chart 9: Share of Remittances made by Islami Banks & All Banks (January-March 2018)
12
Table 4: Number of Bank Branches of Islamic Banks (January-March 2018)
Name of the Bank Urban Rural Total
A) Full-fledged Islamic Banks 681 456 1137
1| Islami Bank Bangladesh Limited* 231 101 332
2| ICB Islamic Bank Limited 28 5 33
3| Social Islami Bank Limited * 74 77 151
4| Al-Arafah Islami Bank Limited 83 71 154
5| EXIM Bank Limited 74 44 118
6| Shahjalal Islami Bank Limited 70 43 113
7| First Security Islami Bank Limited 87 81 168
8| Union Bank Limited 34 34 68
B) Islamic banking branches of Conventional banks 18 1 19
1| The City bank Limited 1 0 1
2| AB Bank Limited 1 0 1
3| Dhaka Bank Limited 2 0 2
4| Premier Bank Limited 2 0 2
5| Prime Bank Limited 5 0 5
6| Southeast Bank Limited 4 1 5
7| Jamuna Bank Limited 2 0 2
8| Bank Alfalah Limited 1 0 1
9| HSBC Limited 0
C) Islamic banking windows of Conventional banks 25 0 25
1| Sonali Bank Limited 5 0 5
2| Janata Bank Limited**
3| Agrani Bank Limited 5 0 5
4| Pubali Bank Limited 2 0 2
5| Trust Bank Limited 5 0 5
6| Standard Bank Limited 2 0 2
7| Bank Asia Limited 5 0 5
8| Standard Chartered Bank 1 0 1
D) Total=A+B+C 724 457 1181 * Including SME **Janata Bank Limited has obtained permission for starting Islamic Banking window from Bangladesh Bank, but not yet started..
Events Organized by the Islamic banks during the quarter
Islamic banks' Sharia'h Supervisory Boards have inspected 262 branches and 09 meetings held during the
quarter January-March 2018. Total numbers of publications published by the Islamic banks are 10, of which the
number of publication was Islami Bank Bangladesh Ltd. 08 and ICB Islamic Bank Ltd. 01 and Exim Bank Ltd.
01 during the quarter under review. Besides, Islamic banks have organized 62 seminar/workshop/conference
and 102 training course in home and the participants of foreign training course is 51 in number for boost up the
Sharia'h based knowledge of its employees during January-March 2018 quarter.
13
Concluding Remarks and Recommendations
Among different segments of Bangladesh’s Islamic finance Industry, Islamic banking industry dominates. The
Islamic banking segment continued to show rapid expansion in terms of growth of assets, deposits, investments,
and number of account holders. Now the Islamic banking sector accounts for more than 20% market share of
the entire banking sector and it plays a significant role in mobilizing deposits and financing different sectors of
the economy. During the quarter under review it is observed that, total investment increased this quarter mainly
in the sector like MSME, Trade & Business through the operational mechanism of different modes. Islamic
banking sector of the country may conduct some empirical research and surveys to redesign their investment
policies because the investments made by these banks in true modes like Mudaraba and Musharaka are at a
minimal level (only 1.77% of total investments). They should pay more attention in Research & Development
(R&D) to devising the proper guidelines and policies to promoting investments under Mudaraba and Musharaka
modes. Islamic banks may explore and innovate new sharia’h based financial instruments for better liquidity
management. As sharia'h is the backbone of the Islamic banking industry, a comprehensive Islamic legal
infrastructure with clear ground and commitment is necessary to help expedite Islamic financial industry to spur
as it intends for ensuring human welfare.
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